I don't remember much about New York. When I was ten years old, my family went there on holiday. I'm sure we visited the Statue of Liberty and the Empire State Building but the thing I remember is the search for a Chicago Bulls shirt. You see, my elder brother, a teenager at the time, wanted one badly. So badly, in fact, that the whole family spent a day being dragged up and down the busy streets, in and out of shopping malls. We failed to find one, which seems incredible, but New York is very big and we were very English. And it wasn't as if any old shirt would do. He wanted the number 23, for it was 1992 and Michael Jordan was in his prime. Now, just to be clear, my brother was not destined to play in the NBA. I'd never seen him shoot so much as a single hoop. I bet he hardly even knew the rules.
I've dredged up this piece of family folklore because it seems to me to illustrate not only that my brother could be a pain in the arse but also what people mean when they talk about sports stars having "cross over appeal". An athlete can be said to have this quality when people who have no interest in their sport a) know who they are and b) want to buy things with their face or name on. This is the point at which business becomes interested in sport.
In 1984 Nike were a sneaker company struggling to think of something else to sell other than running shoes. Then someone hit on the idea of selling Michael Jordan. Apparently, "His Airness" wasn't that keen. He preferred Converse trainers, which already had a basketball legend, Magic Johnson, on board - or even Adidas, but the German company weren't interested. Jordan's initial contract with Nike was reputedly worth $2.5 million. Annual sales of the Air Jordan trainer are now $1 billion. Jordan, who retired from professional basketball for the third (and, one assumes, final) time in 2003, continues to earn $45 million a year, mainly through Nike. The relationship survived revelations of a gambling habit and an extra marital affair. Yet Jordan has always been faithful to his trainers. When he was asked why he chose not to campaign for Harvey Gantt, an early civil rights leader, who was running for a Senate seat in Jordan's home state of North Carolina, MJ famously responded: "Because Republicans buy sneakers too."
Last week, a false rumour started on the internet that Jordan would be present when his Nike stablemate, Tiger Woods, made his very public apology. Had he been there, he would have heard Woods acknowledge that, "My behaviour has caused considerable worry to my business partners. For all that I have done, I am so sorry." The media attention on the golfer's affairs has led three of his sponsors to cut him loose: the consulting firm, Accenture; the communications company, AT&T; and, most recently, the energy drink company Gatorade, which is owned by PepsiCo. Others, including the Gillette shaving brand, which belongs to consumer goods company, Proctor & Gamble, withdrew adverts featuring Woods. A study by the University of California has suggested that the scandal is likely to have caused $12 billion of economic damage. In the UK, recent scandals involving Chelsea footballers John Terry and Ashley Cole have been equally embarrassing for their sponsors. ITV recently withdrew Terry's picture from their promotional material for the World Cup. According to the US insurance broker, DeWitt Stern, companies are starting to explore the possibility of taking out policies against the risk of financial damage caused by the conduct of their famous associates. So why do businesses risk their brands on the behaviour of celebrities? The answer brings us back to the Chicago Bulls shirt.
The commercial value of Tiger Woods's image eclipses even that of Michael Jordan. Nike used it to launch a new golf division from scratch. The company now makes over $800 million a year from golf equipment. Forbes estimates the value of the Woods brand (the amount he can expect to earn from sponsorship above the average for a professional golfer) at $82 million - more than the next five athletes on the list (including David Beckham) put together. E-poll market research puts the Woods's public awareness level at 83 per cent. 83 (as golfers would know) is well above par - Phil Mickelson, for example, scores just 25 per cent. In the second half of 2008, Woods took a break from golf to recover from knee surgery. Without him, viewing figures almost halved, which is why advertisers are prepared to pay a 53 per cent premium for tournaments in which Woods is taking part. It is even said that when he wins a major tournament at the weekend, the US stock market opens with a bounce on the Monday.
Accenture spent 50 million on advertising last year, 85 per cent of which featured Woods. He has been replaced in their promotional material by, amongst other things, a surfing elephant (who looks good in the water but would struggle, one suspects, around the green). The management consulting firm have said that their business has not been affected by the scandal surrounding Woods. So why did they drop him? Perhaps simply because of the amount of time they were spending making public statements about a golfer.
But Woods is not the first celebrity to embarrass his sponsors. Only last year, for example, the swimming phenomenon Michael Phelps lost contracts with the cereal company, Kellogg, after he was caught smoking marijuana. And the stories are not limited to sporting figures. The British supermodel, Kate Moss, lost a £2 million pound contract with the UK high street retailer, H&M, when she was pictured using cocaine. Within a year, Moss had secured new deals with Christian Dior, Louis Vuiton and Burberry. However, sports stars are often chosen because their athleticism implies clean living. The rules for rock stars are slightly different. Iggy Pop is somehow selling car insurance because of his history of hedonism and not in spite of it. It's a fair bet he won't be dumped if he's caught sex-texting.
The sponsors are not really in the position to act as moral arbiters. Often their own conduct doesn't bear much scrutiny. Magic Johnson lost all his major sponsors after he announced he was HIV positive in 1991. The confectionary company, Nestlé, immediately pulled his advert for a new chocolate bar and Johnson's long term sponsors, Converse let his contract run out in 1994. There is also a persistent refusal on the part of the major sports brands to recognise a meritocracy amongst female athletes, which means sporting mediocrities like Anna Kournikova can make millions, provided they have other marketable assets. The $26 million Maria Sharapova earned from endorsements last year was as much as the Williams sisters put together. And yet she has won three grand slams singles titles compared to their combined total of 19.
But companies should think carefully before cutting a celebrity endorsement. As Kate Moss proved, if a famous person's appeal is strong enough they will still sell frocks (or Bulls shirts or golf balls, as the case may be). Tiger Woods remains a potent brand. If anything, his profile has risen. The television ratings when he returns to the golf course will break records. Don't bet against him winning another major tournament - and a few more corporate sponsors.